Georgian real estate glossary

Source of Funds

Source of Funds (SoF) refers to the specific origin and mechanism through which capital for a financial transaction—such as a real estate purchase or cross-border wire transfer—was derived. In Anti-Money Laundering (AML) compliance, investors must submit documentary evidence (e.g., employment income, business dividends, property sales) proving that capital originates from legitimate legal activities.

Cadastral Extract

A Cadastral Extract is an official document issued by the National Agency of Public Registry (NAPR) in Georgia that serves as legal proof of real estate ownership. It details the property's unique cadastral code, registered owner, exact surface area, land status, and active encumbrances such as mortgages, tax liens, or court injunctions.

Notary in Georgia

A public notary in Georgia is a state-commissioned legal official authorized to certify legal documents, authenticate signatures, draft notarized powers of attorney, and verify property transaction contracts. While property title transfers can be executed directly at the Public Service Hall, a notary is essential for remote purchases, foreign document legalization, and translation certification.

Co-ownership

Co-ownership is a legal structure where two or more individuals or corporate entities hold simultaneous title to the same real estate property. Each co-owner holds a distinct fractional share or undivided interest, governing their respective rights to usage, rental income distribution, maintenance costs, and eventual asset disposition under property law.

Encumbrance Certificate

An Encumbrance Certificate is an official government document verifying that a real estate property is free from legal liabilities, financial mortgages, tax liens, court attachments, or third-party usage rights. It provides conclusive evidence of clear title and current legal status prior to a sale.

Building Permit in Georgia

A building permit in Georgia is an official authorization issued by local municipal authorities, such as the Tbilisi Architecture Service, granting the legal right to construct, renovate, or demolish a property. Governed by the Code of Spatial Planning, Architectural and Construction Activity, permits are categorized into four complexity classes and typically follow a three-stage approval process.

Developer License in Georgia

In Georgia, there is no standalone, general-purpose 'developer license' required to establish or operate a real estate development company. Instead, real estate development is regulated on a project-by-project basis through municipal construction permits (Classes I through V) issued under the Law on Licenses and Permits and local urban planning codes.

Leasehold in Georgia

Leasehold in Georgia refers to a temporary contractual or limited real right granting the use and possession of land or real estate owned by another party, governed by the Civil Code of Georgia. While foreign investors can purchase non-agricultural land freehold, leasehold structures—such as long-term leases, usufruct, or right of build—are widely used for commercial land development and agricultural land use.

Freehold Ownership in Georgia

Freehold ownership in Georgia grants the titleholder absolute, indefinite legal ownership over real estate, registered in the National Agency of Public Registry (NAPR). Foreign individuals and entities enjoy full rights to buy, sell, lease, or inherit non-agricultural freehold property without requiring citizenship, local partners, or state permission, subject to general Georgian property laws.

Identity Verification (KYC)

Identity Verification (Know Your Customer or KYC) is the mandatory process by which financial institutions, legal professionals, and regulatory bodies confirm the identity, legal status, and source of funds of a buyer or seller. In real estate transactions, KYC ensures compliance with anti-money laundering (AML) laws, prevents fraud, and facilitates secure property registration and banking operations.

Preliminary Sale Contract

A Preliminary Sale Contract is a legally binding agreement in real estate transactions that obligates the seller to sell and the buyer to purchase a property under specified terms before final title transfer. In Georgia, registering this contract with the National Agency of Public Registry (NAPR) protects the buyer by encumbering the title against third-party sales or mortgages.

Commissioning Certificate (Act of Exploitation)

A Commissioning Certificate (colloquially referred to as an Act of Exploitation or Act 3) is an official document issued by municipal supervision authorities in Georgia certifying that a newly constructed building complies with all approved design plans, safety codes, and planning regulations, legally authorizing it for occupancy.